Kathleen Balthrop Havener is a partner at the Havener Law Firm in Cleveland, Ohio, where she is a general practice litigator. She may be reached at firstname.lastname@example.org.
A new solo must consider several forms of insurance before hanging the shingle and unlocking the door. And when we talk about insurance for lawyers, the first thing we have to discuss is malpractice coverage.
The best place to get names of insurance brokers is from other attorneys. Seek advice from other solos or from small firm practitioners for reputable and quality coverage. Both the ABA (through the ABE, the American Bar Endowment) and your state bar have partnerships with enterprises through which you can purchase malpractice coverage. Determining the amount of coverage necessary is important. Coverage can range from $100,000 per occurrence and maybe lower to a suitable safety net of $1,000,000 per occurrence and a $1,000,000 annual policy limit. The level of coverage could go even higher if your practice warrants. Policies vary in cost by state and practice area. Policies generally go up in expense as more time and matters are covered.
In addition to your malpractice you will need a CGL policy (commercial general liability). This covers your office and (if you negotiate it properly), your equipment, business interruption (e.g., solo in New Orleans after Hurricane Katrina), and slip and fall kind of situations for business invitees or vendors who happen to be on your premises. Again check with the ABE, your state and local bar associations, and your friends and colleagues.
If you plan to have employees, even an assistant or intern, you will need workers’ compensation coverage. As the rules for workers’ comp vary by state, you’ll need to seek the guidance of your state bar or workers’ comp agency. Moreover, most communities have nonprofits for start-ups who may be able to guide you through the steps you need to take to be compliant.
Now what about you and your family? You’ll need health insurance. Membership in the ABA or your state bar association gives you the advantage of being a member of a “group” and obtaining a group rate even though you’re not big enough to constitute a “group” of your own. In addition, every health insurer sells individual policies, usually quite pricey but comparably generous, and if you sneak in during the “open enrollment” period, the insurer cannot turn you down for preexisting conditions.
Disability insurance is a tricky issue. How old are you? Find out from the ABE or your state bar what your cost would be if you bought a disability policy from them. The problem often is the need to show two years of wages for the disability insurer to agree to your monthly coverage should you need it, and you can’t give them what you don’t have. So if you’re in a job and waiting to start your own practice, get your disability insurance now rather than after you go into practice. The same goes for life insurance.
Finally, although it’s not necessary and many people don’t bother, an “umbrella” policy covers essentially everything and is designed to be used only if your other coverage is insufficient. It’s a comfort.
Spend some time on the web researching products offered by the American Bar Endowment and those entities partnered with your state bar. Get an idea of the prices you should expect and then ask questions of other independent brokers as well. Given your budget and the kinds of insurance products you decide upon, give yourself a week to ten days to get coverages in place (maybe more for health insurance).
Then lawyer your heart out.